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Supreme Court simplifies Right to Manage law and practice

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14/01/2022

Why is FirstPort Property Services v Settlers Court RTM Management Company of interest?

The Supreme Court has considered whether a right to manage (RTM) company has the right to manage (or share in the management of) areas on a residential estate which are shared with lessees in the non-RTM blocks.  Its decision updates the law and should simplify the management of multi-block estates, where the right to manage has been invoked.

What happened in the case?

The Supreme Court has handed down its much-anticipated judgment in FirstPort Property Services v Settlers Court RTM Management Company [1]. The case concerned the question of whether an RTM company, set up to manage a residential block on an estate pursuant to the provisions of the Commonhold and Leasehold Reform Act 2002 (the 2002 Act), acquires the right to manage (or share in the management of) areas on the estate which are shared with the lessees in from the non-RTM blocks.

The Supreme Court unanimously agreed that the previous Gala Unity case [2], in which the same issue was considered by the Court of Appeal, was wrongly decided. The Supreme Court therefore overturned that decision.

In FirstPort the Supreme Court decided that when the lessees in a block on a multi-block estate succeed in making an RTM application in relation to their block the RTM company:

  • does not take over management in relation to areas on the estate which are shared with lessees in the other blocks;
  • only acquires the right to manage the relevant building (or part of a building), together with appurtenant property (if any) [3].

What advice arises?

The FirstPort decision should avoid complexities which have arisen in the management of multi-block estate post-Gala Unity, which stated that an RTM company would acquire the right to manage shared areas of an estate.

Following Gala Unity, complications could arise from the fact that prior managers (such as the landlord or the named management company in the leases) could enter into an agreement with the RTM company to agree which areas of the estate each party would manage, but there was no legal obligation upon the parties to enter into a such a shared services agreement. In addition, where there was a multi-block estate with several RTM applications proceeding in relation to each separate block, it would be difficult for all of the various entities to agree on who would manage the estate, or which parts of the estate.  The 2002 Act does not contain any mechanism whereby the RTM company and the lessees in the non-RTM blocks would have any mutual rights and obligations as between each other, in that there is no ability on the part of the lessees in those other blocks to enforce the RTM company’s estate management obligations, and nor does the RTM company have the right to enforce the payment by those other lessees of their shares of the costs of the estate management services.

FirstPort simplifies the law in this area and it should therefore help in relation to the management of multi-block estates, where the RTM has been invoked.

 

[1] FirstPort Property Services Limited v Settlers Court RTM Management Company Limited & Ors [2022] UKSC 1

[2] Gala Unity Ltd v Ariadne Road RTM Co Limited [2012] EWCA Civ 1372

[3] with “appurtenant property” in this context meaning nearby physical property over which the occupiers of the relevant building (or part) have exclusive rights

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